There is a potentially lucrative group of buyers that many sellers don’t initially think about.  We are talking about foreign buyers.  While there are some hurdles to working with these types of buyers, it is important to note that there are many huge advantages as well.  Let’s take a closer look.

How Are Foreign Buyers Different? 

At the top of the list of ways in which foreign buyers are different is that they are often seeking a visa.  Another commonality among foreign buyers, one that will surprise many, is that they may want access to the U.S. educational system. 

It is common for foreign buyers to want to buy a business so that they can get their children into a particular U.S. school district or college.  Sometimes the desire to be eligible for state tuition also plays a role in the selection of a business and the decision-making process.  In this sense, business location takes on a level of importance that it might not have for domestic buyers. 

It is important to keep in mind that there are cultural and business differences that play a role with foreign buyers.  Everything from a different use of business terminology to expectations can play a role.  This could impact negotiations. 

What About Visas and Immigration?

One of the most important things to remember is that foreign buyers are often navigating the complex world of visas and immigration.  Whether or not a visa is issued can dramatically impact whether or not a deal ultimately takes place.  This fact is often built into agreements.  For example, a purchase condition may be conditional upon visa approval.  Nonrefundable deposits may also play a role in the process.

What Do Foreign Buyers Really Want? 

Foreign buyers have been impacted by the pandemic too.  Yet, some factors remain unchanged.  Not too surprisingly, they will want to see that a business is profitable.  In this regard, you should be able to showcase profitability in a clear fashion.  You can expect foreign buyers to want to see tax returns and all the typical documentation that you’d need to provide to any buyer.

A second factor that foreign buyers are interested in is longevity.  If your business has successfully operated for decades, this will be a major advantage.  

Ultimately, most of what domestic buyers are looking for in a business will translate over to what foreign buyers are seeking as well.  With that stated, however, there are factors that are often unique to foreign buyers.  As mentioned above, navigating the often-complex visa process can add a wrinkle to the entire process.

Copyright: Business Brokerage Press, Inc.

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The buyer-seller meeting is quite often a “make or break” meeting.  Your business broker or M&A Advisor will do everything possible to ensure that this meeting goes as well as possible. 

It is vitally important to realize that rarely is there an offer before buyers and sellers actually meet.  The all-important offer usually comes directly after this all-important meeting.  As a result, you want to ensure that meetings are as positive and productive as possible.

Buyers need to understand how the process of selling a business works and what is expected of them from the process.  Buyers also need to understand that following their broker’s advice will increase the chances of a successful outcome. 

Sellers should be ready to be honest and forthcoming during the meeting.  They also want to be sure to not say or do anything that could come across as a strong-armed sales tactic. 

Asking the Right Questions

If you are a buyer preparing to meet a business owner for the first time, you’ll want to make sure any questions you ask are appropriate and logical.  It is important for buyers to place themselves in the shoes of the other party. 

Buyers also shouldn’t show up to the buyer-seller meeting without having done their homework.  So be sure to do a little planning ahead so that you are ready to go with good questions that show you understand the business. 

Building a Positive Relationship

Buyers should, of course, plan to be polite and respectful.  They should also be prepared to avoid discussing politics and religion, which often can be flashpoints for confrontation.  When sellers don’t like prospective buyers, then the odds are good that they will also not place trust in them.  

For most sellers, their business is a legacy.  It quite often represents years, or even decades, of hard work.  Needless to say, sellers value their businesses.  Many will feel as though it reflects them personally, at least in some fashion.  Buyers should keep these facts in mind when dealing with sellers.  A failure to follow these guidelines could lead to ill will between buyers and sellers and negatively impact the chances of success.

Sellers Should Be Truthful

Sellers also have a significant role in the process.  While it is true that sellers are trying to sell their business, they don’t want to come across as a salesperson.  Instead, sellers should try to be as real and honest as possible.

Every business has some level of competition.  With this in mind, sellers should not pretend that there is zero competition.  A savvy buyer will be more than a little skeptical.

The key to a successful outcome is for business brokers and M&A Advisors to work with their buyers and sellers well in advance and make sure that they understand what is expected and how best to approach the buyer-seller meeting.  With the right preparation, the odds of success will skyrocket.

Copyright: Business Brokerage Press, Inc.

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There is no doubt that the COVID-19 situation seems to change with each and every day.  The disruption and chaos that the pandemic has injected into both daily life and business is obvious.  Just as it is often difficult to keep track of the ebbs and flows of the pandemic, the same can be stated for keeping up to speed on the government’s response and what options exist to assist companies of all sizes. 

 In this article, we’ll turn our attention to an overlooked area of the government’s pandemic response and how businesses can use a whole new lending platform to navigate the choppy waters. 

As the pandemic continues, you will want to be aware of the main street lending program, which is a whole new lending platform.  It was designed for businesses that were financially sound prior to the pandemic.  Authorized under the CARE Act, the main street lending program is quite attractive for an array of reasons.  Let’s take a closer look at what makes this program almost too good to be true.

This lender delivered program is a commercial loan.  Unlike the PPP, there is no forgivable component.  However, the main street lending program does have one remarkable feature that will certainly grab the attention of all kinds of businesses.  It can be used to refinance existing debt at a rate of around 3%.  With that stated, it is also important to note that businesses cannot refinance existing debt with the current lender.  Instead, a new lender must be found.  Generally, loans are a minimum of a quarter million dollars and have a five-year term.  In another piece of good news, there is a two-year payment deferment period.

The main street lending program can be used in a variety of ways.  In short, the program is not simply for refinancing existing debt.  Additionally, there is no penalty for prepayment.  The way the program works is that lenders make the loans and then sell 95% of the loan value to the Fed.  This of course means that the lender is only required to retain 5% of the loan on their balance sheet.  The end result is that lenders can dramatically expand the amount of loans they can make.

Whether it is the PPP or a program like the main street lending program, there are solid options available to help you.  Businesses looking to restructure debt or put an infusion of cash to good use may find that the main street lending program offers a very flexible loan with great interest rates.

Copyright: Business Brokerage Press, Inc.

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